Protect Yourself during this Recession

During this economic crisis, we have seen retail sales drop, food prices rise and banks drastically curtail lending to almost everyone. To this end, here are a few steps that you can take to help ease the financial burden brought on by the times we live in:

• Establish a household budget and stick to it. Keep contributing to your 401(k). Pay down your credit card debt. Pay only with cash; if you can't afford an item, don't buy it. Limit any wasteful spending such as frequent dining out or buying a gourmet coffee each morning.
• If you have Certificates of Deposit at your local bank, the American Association of Retired Persons (AARP) advises that you not automatically roll them over. Instead, maximize the growth of your CDs. Always call or visit the bank to review current interest rates, including any promotional rates that might be available. Banks often run promotions offering interest rates higher than their regular rates. You can be certain that an automatic renewal won't get that rate – unless you ask for it. Millions of CD owners take the easy road at renewal time. Banks love customers like that, but those people are unknowingly making a mistake that you should avoid.
• If your bank has closed or merged with another bank, contact the institution to ensure that procedures are still the same. If you're opening a new account, research the banks in your area. Ensure that your money will be insured by the FDIC up to $250,000, and compare their fees, as well.
• Make sure that you don't overdraw your checking account. The fees can add up quickly. Balance your checking account immediately upon receipt of the bank statement. In addition, if you're using your checking account to pay bills online, record the payments into your checkbook immediately. In this way, you'll know exactly what your balance is at all times.
• As far as your taxes are concerned, AARP also advises that you not overpay your quarterly estimates or increase your tax withholding to avoid owing the IRS come tax time. In reality, it's a sure way to get less than zero interest on your money. The least expensive way for you to meet your tax liability is to have estimated payments taken out as close as possible to the amount you'll actually owe.
• Check your credit report annually to determine if there are any entries that are unfamiliar. If so, contact each credit reporting agency directly. Check your FICO scores with each agency, as well.
• Put aside one credit card to be used only for emergencies. If you have several credit cards, ensure that you make all payments on time to avoid late fees or an increase in interest rates. Call your card companies to ascertain if the rates can be lowered.
• Finally, since no one really knows how long this crisis will last, it's a good idea to put aside enough money to cover your household expenses and any other necessities for the next 18 months.